Some Cincinnati officials are saying a controversial move last year to yank a longtime contract from a private company is now hampering the effectiveness of the city’s network of neighborhood councils.

A perfect storm combination of leadership infighting, a struggling economy, City Council’s decision to move control of funding in-house and the ensuing bumpy transition has caused concern for the future of the neighborhood groups.

In December, City Council approved the 2009 municipal budget that called for ending its $112,800 contract with Invest in Neighborhoods (IIN) to administer Neighborhood Support Program funds for the community councils and provide training for their leaders. Instead, City Council members said, the city’s own Community Development Department would do the job for $50,000, less than half the cost.

Nine months later, some neighborhood council leaders and even City Council members who voted for the move are saying it might’ve been a grievous error.

“Historically, the councils have done a lot of the work that City Council and the city administration just can’t do,” says Councilwoman Laketa Cole who, as chair of council’s Neighborhoods and Public Services Committee, was against pulling IIN’s contract. “They’ve taken care of the details that nobody else is in a position to do — from beautification projects, to youth and safety programs. Now, we’ve put them in a position to fail.”

Since the late 1970’s, Cincinnati has depended on a network of 52 community councils and 34 business districts to oversee spending on neighborhood projects ranging from beautification to youth programs and zoning.

The groups have also served as neighborhoods’ voice to Cincinnati City Council and had input on a wide range of issues, some which may have otherwise fallen through the cracks.

City officials first entered into a contract with IIN in 1991, and annual reviews led the city to renew the pact each year. Despite those renewals, the group became entangled in controversies during the past few years, including suspensions of community councils for misuse of funds, conflict of interest charges and accusations of inappropriate politicking.

IIN’s credibility staggered in 2006, when its director resigned following felony theft charges (Gerald Tenbosch was charged with stealing $16,500 from the Finneytown Athletic Association, where he was treasurer), and squabbles with the city escalated.

In October of that year, City Council members issued a scathing note to the group. The letter, signed by current Councilmembers Jeff Berding, Leslie Ghiz and Chris Bortz among others, also included charges that IIN had strayed from its mission and ignored city laws.

The conflict came to a head last year when some IIN trustees alleged unethical practices and secret dealing within the group’s leadership.

In June, they led a 9-8 vote of the group’s board of trustees to hire a new director, effectively dismissing interim director Rick Dieringer. The general membership later overturned the vote, leaving Dieringer in place, and voted to oust seven of the trustees who voted to dismiss him. Afterwards, another three trustees quit in protest.

The displaced trustees took their complaints to City Council. Despite pleas from City Manager Milton Dohoney and Community Development Department Director Michael Cervay advising them otherwise, City Council voted to once again administer the program in-house.

Cole,
still frustrated by her fellow council members, says past clashes with
IIN — and in particular, Dieringer — fueled the vote.

“In my mind, it
was personal. Some council members were not happy with (Dieringer)
personally, and that led to their decision,” she says. “They didn’t
talk to the community councils to hear what they thought, they didn’t
go out to the neighborhoods to ask the residents. They didn’t
listen to Milton Dohoney. They decided to move on it and didn’t think
about the results.”

Dohoney and Cervay had said the city, with only
$50,000 budgeted for the process, didn’t have the available staffing or
funding to administer the programs. Since then, some of those concerns
have come to fruition with delays plaguing the neighborhood councils’
operations.

Under the new arrangement, the city had to
negotiate individual contracts with each neighborhood council and
business district, which had to be approved before they could spend any
of their annual stipend or act on projects; that was only recently
finalized. Neighborhood councils also complain that technical support
has been slow.

“The problem is, the city’s just not set up to handle it
all,” says Avondale Community Council Trustee Fulton Jefferson.
“Everything we do with the city, the cycle takes too long because of
the bureaucracy or because they just don’t have someone to do it right
away.”

Madisonville Community Council President Robert Mendlein adds,
“A lot of the councils have programs and events on hold because they’re
not sure they’ll still be able to do them. They don’t know if the rug’s
going to be pulled out from beneath them. It’s a struggle to move
things forward.”

The most debilitating change has come in how neighborhood councils gain access to their funding. IIN, with
discretionary funds at its disposal, could “front” the neighborhoods
cash for approved projects and wait for repayment by the city. The
neighborhood councils, routinely operating on a shoestring budget,
would receive funds within 2-3 days with adequate documentation, which
was important for projects that required pre-payment.

City
rules for dispensing funds, however, require the councils to submit
cancelled checks with their invoices, meaning they first would have to
spend money in order for the city to reimburse it. A majority of the
smaller councils don’t have funds to “pre-pay” vendors, locking them in
an impossible situation.

Even for those community councils
with that ability, having to submit cancelled checks means waiting
30-60 days for reimbursement from the city.

Because of that Catch-22,
some councils haven’t been able to use their funds, says Camp
Washington community organizer Joe Gorman.

“It’s an incredible
bureaucratic maze that handcuffs the smaller councils,” Gorman says.
“The larger councils can handle it, but the majority of neighborhood
councils can’t. … We are in August, and Camp Washington has hardly
touched our money because of the confusion.”

Gorman, who has
been involved with community groups since the 1970s, says the councils
are also losing volunteers because of the problems.

“In all my
years working with the neighborhoods, I’ve never seen it this bad,” he
says.

Cervay says the city has been working to add flexibility to the
process but won’t be able to operate the same way IIN did.

“City
government just can’t operate that way,” Cervay says.

But he has
instituted a process in which neighborhood councils can receive funds
on an invoice, rather than cancelled checks. After forwarding funds,
the group wouldn’t receive further funding until they had completed the
required paperwork, including the cancelled checks.

And
providing timely service might become even more difficult.

With the
city’s $28 million budget deficit and layoffs of city workers looming,
Cervay says he will lose seven members of his office. As the city plans
its 2010 budget, it’s also unlikely his department will get extra
funding to bear the administrative burden.

Cincinnati Vice Mayor David Crowley, who supported ending IIN’s contract, now says it’s clear the move was a “huge mistake.”

“Invest
wasn’t without its faults, but we have to have serious concerns about
how this turned out,” Crowley says. “We had a pretty well-functioning
group in place, and we acted prematurely without thought to the full
consequences for the neighborhoods. We didn’t listen to
advice from our own people, and this is one of those times when it may
have come back to bite us in the ass.”